Western Digital Q1 Fiscal 2026 Earnings: Cloud Storage Demand Drives 27% Revenue Growth
Western Digital's fiscal Q1 2026 revenue rose 27% year-over-year to $2.82B, powered by cloud demand for high-capacity drives, with margins and cash flow improving and the dividend raised 25%.
| Q1 2026 | Reported |
|---|---|
| EPS | $3.07 |
| Revenue | $2.82B |
Figures as reported by the company to the SEC for the quarter ended October 3, 2025. Analyst estimates are not part of a filing, so no comparison to expectations is shown.
Key takeaways
- Revenue reached $2.82 billion, up 27% from the same quarter a year earlier, as demand for the company’s high-capacity “nearline” hard drives — the kind cloud data centers use to store massive amounts of data — remained strong.
- Growth was driven largely by cloud and data-center customers building out storage capacity to support AI workloads; management said the company continues to operate in a strong demand environment tied to growth of data storage in the cloud.
- Profitability improved noticeably from a year ago: the company’s trailing-twelve-month gross margin stood near 49% and operating margin near 30%, reflecting better pricing and cost efficiency as higher-capacity drives make up more of the mix.
- The company generated $672 million in cash from operations and $599 million in free cash flow (cash left over after equipment and other capital spending) during the quarter, underscoring healthy underlying cash generation.
- Western Digital’s board raised the quarterly dividend to $0.125 per share, a 25% increase from the prior payout, a signal of management’s confidence in ongoing cash flow.
- For the current quarter (fiscal Q2 2026), the company’s own outlook calls for revenue of about $2.9 billion, plus or minus $100 million, which at the midpoint would represent roughly 20% growth from a year earlier.
- CEO Irving Tan characterized the demand backdrop in structural terms, saying AI-driven data growth is creating unprecedented demand for high-capacity, reliable storage, and that the company expects long-term data storage demand to grow faster than a 25% annual rate.
- Trailing-twelve-month return on equity was unusually high, above 100%, a figure influenced by the company’s capital structure and recent swings in profitability rather than a typical steady-state level.
Q1 2026 in context
| Metric | Oct 2025 | Sep 2024 | Change |
|---|---|---|---|
| Revenue | $2.8B | $2.2B | +27.4% |
| Net income | $1.2B | $493M | +139.8% |
| Free cash flow | $599M | -$62M | +1066.1% |
| Diluted EPS | $3.07 | $1.35 | +127.4% |
| Gross margin | 43.5% | 36.4% | +7.1 pts |
| Operating margin | 28.1% | 15.1% | +13.0 pts |
| Net margin | 41.9% | 22.3% | +19.7 pts |
Figures for the quarter ended Oct 2025 and the quarter ended Sep 2024, as reported to the SEC.
How the stock took it
Western Digital Corp closed at $138.13 on Oct 30, 2025, the last session before the report, and at $158.02 on Nov 3, 2025, the first session after it — +14.4% across the report.
| Earlier report | Close before | Close after | Change |
|---|---|---|---|
| Aug 14, 2025 | $76.07 | $75.06 | -1.3% |
Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.
Sources: company report · earnings call